Media Press Release

MTD Capital Bhd does not plan to take its subsidiary MTD Infraperdana Bhd private despite breaching the minimum 25% public spread requirement in the latter, sources close to the group said.

In the month of July alone, MTD Capital has bought more than nine million MTD Infraperdana shares from the open market, raising its stake to 75.81% comprising 825.37 million shares as of July 22, from 74.98% on July 6.

MTD Capital breached the 25% spread on July 7 when it bought 1.11 million shares in MTD Infraperdana to raise its stake to 75.08%.

After the breach, MTD Infraperdana was no longer allowed to buy back its own shares. Prior to that, MTD Infraperdana was actively buying back its own shares and as at July 1, it had 59.23 million shares retained in treasury.

Sources said MTD Capital planned to dispose of shares in MTD Infraperdana when the market price improved in order to fulfill the public spread requirement and to maintain its listing status.

A source said MTD Capital believed that MTD Infraperdana was undervalued. "Also the 20 sen capital repayment to MTD Infraperdana shareholders will help to reduce holding cost," he said.

He also claimed that traffic on the East Coast Expressway phase one (ECE1) was growing rapidly. MTD Infraperdana also operates the KL-Karak Highway and is acquiring two more tolled roads -- East-West Link Expressway and Sungei Besi Expressway -- from sister company Metacorp Bhd for RM245 million cash.

Since the ECE1 concession began operations on Jan 1, 2005 up till June 30, 2005, traffic on the expressway stood at 137,835 passenger car units-kilometre (PCU-km), with about a third of the volume occuring last month at 48,692 PCU-km.

An analyst said while MTD Infraperdana was partly hampered by its huge paid-up capital and relative lack of liquidity, it remained a defensive stock, with an annual dividend policy paying out 50% of its net profit.

In June, ECM Libra Research initiated coverage on MTD Infraperdana with a buy call at the then market price of 85 sen, valuing it at RM1.16 based on a 25% discount to its discounted cash flow value. The stock is now trading at RM1.04.

ECM Libra said apart from the capital repayment, MTD Infraperdana offered investors a very unique combination of robust defensive earnings growth (both organic and acquisitive), and decent and rising dividend yields.

ECM Libra said MTD Infraperdana was poised to deliver earnings per share compounded annual growth rate of 33% over the next three years.

MTD Capital and MTD Infraperdana in May proposed a capital repayment of 30 sen and 20 sen per share respectively for a total of up to RM340 million cash.

MTD Capital is proposing to repay a total of RM82.98 million, while MTD Infraperdana's proposal involves paying a total of RM229.58 million.

After the capital repayment, MTD Infraperdana's paid-up capital of 1.18 billion 80 sen shares will be reduced to 1.18 billion 60 sen shares. MTD Infraperdana is borrowing to fund the exercise.

MTD Infraperdana posted a net profit of RM30.65 million for the year ended March 31, 2005 on the back of RM116.75 million revenue.

By Thomas Soon